FDR: updated buyout price modelAs expected, I can minimize assumptions all day and still get a staggering end number. What follows are my inputs and formulas. Like Tom Hanks (Jim Lovell) in Apollo 13, I'm a little tired and I would appreciate a check on my figures, Houston. This is fast becoming a very high stakes game.
I did use Excel, though my hope is to tempt one or more of my readers to replicate my work rather than just glance over it. So I will not show the spreadsheet itself.
But here is everything you will need to recreate it:
Fully diluted, 85 million shares by the time FDR earns 75% of Antino project. Value paid to FDR per oz Au is CAD$130 by time of buyout – a fairly reasonable estimate, as I’ve shown previously.
Grades: Froyo (including Cupcake, clair, Ginger) and Donut each prove up 1.75g/t. Lower Antino and Parbo = 1.00 g/t. Buese = 0.75 g/t. Lawa = 0.5 g/t. Corridors (along trend) between Upper Antino and Buese, and from Buese SE toward property edge = 0.3 g/t each.
Froyo and Donut zones go to 200m depth, all others go to 150m. Saprolite layer weighs 1.45 t/cubic meter, and is assumed to be top 30m in all zones. Normal FDR rock weighs 2.7 t/m^3.
For the zone footprints, I tried to be very conservative when eyeballing the satellite map. Froyo =1000x400m. Donut =200x100. Buese =1000x300. Lower Antino =900x300. Parbo =700x400. Lawa =2000x1000. Corridor from Upper Antino to Buese, and corridor from Buese extending to SE = 4500x75 each.
To account for the fact that these zone “shoeboxes” are only partially mineralized, I assumed a football shaped deposit just small enough to fit. A sphere occupies slightly more than half the volume of a perfectly fitted cube containing it. I didn’t do the math for a football in a shoebox, but I believe the ratio is roughly similar.
Applying my estimates, the formulas (and oz totals) for the Froyo Zone would be:
((L x W x 30 x 1.45 x 1.75) / 31.1)*0.5 = 489,550 oz Au (in the saprolite)
((L x W x (D-30) x 2.7 x 1.75 / 31.1)*0.5 = 5,165,595 oz Au (in the normal rock)
The end result is indeed a projected buyout price of over CAD$20. I will omit the exact figure to see if any of your own totals mirror my calculations precisely. Assuming you chose to share them.
In any case, you can then play with the assumptions on the model yourself.
Lawa looms large in any projection – no wonder Colin is so excited about it. I cut that zone to barely 1/10th of the footprint suggested by the outline on the Founders slide deck, and its impact is still gargantuan. Some of what appear to be its artisanal workings are likely clouds (you can tell by the symmetrical shadows cast), but the potential is still high even at 0.5/t.
Note I again left out any estimate of tailings value. Still not quite sure how to incorporate them. But rest assured, those valuable leftovers from our artisanal allies will serve as a sizable cushion of safety for any FDR valuation. And bring comfort to any acquirer who might be short of working capital.
Nor did I even attempt to imagine how the model would have to grow to accommodate a tripling of the 20,000-hectare land package if we do get some neighboring territory, as management has indicated. Depends how many artisanal workings come with that, I suppose.
So, off you go, my fellow speculators. See if your own slide rules agree with mine. Or if our base assumptions match. Or if you think I’ve left out something.
Back-of-the-envelope calculations are fun, especially when computers do the math for us!